U.S. Aid to Africa Must Stop, argues African Economist

Dambisa Moyo
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In a provocative new book, Zambian economist Dambisa Moyo argues that foreign aid in Africa, has been an "unmitigated political, economic and humanitarian disaster," an idea that "seemed so right" but is in fact "so wrong" that, like asbestos or the Hummer, it should be phased out entirely within the next decade.

“Why?” asks Sonia Shah in The Nation magazine. “Well, he who pays the piper calls the tune.”

Foreign aid, in some African countries, has become government's primary source of revenue, Moyo points out. In Ethiopia and Gambia, for example, a whopping 97 percent of the government's budget derives from foreign aid. Small businesses selling food, clothing, mosquito nets are cruelly shuttered out of business by avalanches of well-intentioned donations.

The effect is anti-democratic, destabilizing, soul-crushingly "malignant," Moyo writes, and "exceptionally corrosive" to government accountability, civil society and the prospects for economic development.

Moyo is a global economist at an investment bank in London. She previously worked at the World Bank in Washington DC. She holds a PhD in Economics from Oxford University and a Masters from Harvard University. Her book, Dead Aid, is available through Amazon.
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http://www.saharareporters.com/index.php?option=com_content&view=article&id=2200:us-aid-to-africa-must-stop-argues-african-economist-&catid=1:latest-news&Itemid=18

All aids to africa must stop. Period.

After all, if you give a man a fish, he eats for a day.

True. We need trade, not aid.

I think a combination of both aid and fair trade will do a whole lot of good than just cutting one off for the other. A system in which Africa is weaned off the aid would be more appropriate.
After some time, when the trade has taken off then the aid could be stopped.
Stopping aid abruptly will be disastrous for the people that depend solely on it.

vanitty:

I think a combination of both aid and fair trade will do a whole lot of good than just cutting one off for the other. A system in which Africa is weaned off the aid would be more appropriate.
After some time, when the trade has taken off then the aid could be stopped.
Stopping aid abruptly will be disastrous for the people that depend solely on it.

If memory serve me right, that process have been done before, however in a different way. There have been investments from outsiders purposely for the sole aim of making sure that our long-term reliance on foreign aid is manageable, however such programme failed.

I personally feel, we need to pay the price for our reliance on aids to be honest. If these aids stops, people will become more resourceful one way or the other. We are humans and our survival instinct will kick in. Yes people will die here and there, but I personally believe it wil be a price worth paying.

How long have we been on aids for? Don't forget that giving aids to African will make us perpetual consumers - which is what the 1st and 2nd world wants. If we however, get the balance right, then we will be more of Producers and Manufacturers. This will benefit us better than the position we are currently in a the moment.

ElRazur:

If memory serve me right, that process have been done before, however in a different way. There have been investments from outsiders purposely for the sole aim of making sure that our long-term reliance on foreign aid is manageable, however such programme failed.

I personally feel, we need to pay the price for our reliance on aids to be honest. If these aids stops, people will become more resourceful one way or the other. We are humans and our survival instinct will kick in. Yes people will die here and there, but I personally believe it wil be a price worth paying.
How long have we been on aids for? Don't forget that giving aids to African will make us perpetual consumers - which is what the 1st and 2nd world wants. If we however, get the balance right, then we will be more of Producers and Manufacturers. This will benefit us better than the position we are currently in a the moment.

Well that did slip out of your tongue very easily didn't it?
I am not okay with even just one person dying
It has been tried before but it failed that was solely the fault of bad governance but who is to say if tried again with appropriate system put up so that the money don’t keep falling into the wrong hands, it won’t be successful?

vanitty:

I think a combination of both aid and fair trade will do a whole lot of good than just cutting one off for the other. A system in which Africa is weaned off the aid would be more appropriate.
After some time, when the trade has taken off then the aid could be stopped.
Stopping aid abruptly will be disastrous for the people that depend solely on it.

The outright solution is putting a permanent stop to it.
What we have on ground is daylight robbery perfectly parceled by developed countries and concealed as aid to Africa.
We don't need fish,what we need  is to be taught how to fish and this is what they find difficult to do because an independent Africa is a serious threat to their continued dominance.
Testimonies abound of what foreign aid has turned our countries to.
WE NEED NO MORE!

vanitty:

Well that did slip out of your tongue very easily didn't it?
I am not okay with even just one person dying
It has been tried before but it failed that was solely the fault of bad governance but who is to say if tried again with appropriate system put up so that the money don’t keep falling into the wrong hands, it won’t be successful?

In order to ensure the survival of the larger community, a few deaths may be needed. You are clearly having a wishful thinking if you feel you dont want one person to die.

If at first you don't succeed, then try again.So goes the popular saying! If people who have shaped humanity positively gave up on their first and second trials, Jut imagine that.

When it comes to aids, money will carry on falling into the wrong hands. We have a selfish mentality and when people are in power, caring about the majority of the common people are usually their least priority.

In fact, I will go as far to say that hundreds of thousands or even millions will die. But in my opinion, it will worth it in the long run.  I think we need to realise that we are living in a world where it is always the survival of the fittest. So far, Africa is not even fit. We need to do whatever it takes to get fit, and one of the big way is to come of Aids completely. Records from the past have shown that it is counter-productive to say the least.

AID: Dead On Arrival ?
By Kanmi Ademiluyi
It will be rather unfortunate if the great stir being caused by Dambisi Moyo is reduced to just a headline grabbing anti-bono stance. This tendency is already projecting itself. It will be unfortunate if an important work is obscured by trivia.

For the uninitiated, Ms Moyo is a very cerebral Zambian who has worked as a consultant at the World Bank and was an economist at Goldman Sachs. Her book Dead Aid: Why aid is not working in Africa and how there is another way for Africa - argues very strongly that the whole business of surviving on the life support of foreign aid has been bad for the economies of Africa and should stop forthwith. This is in clear contradiction to the position of people like the noted economist Jeffrey Sachs who has argued that more aid is actually necessary. It is important to note that Ms Moyo makes a distinction between AID for humanitarian purposes and bilateral aid.

Understandably, perhaps, as a person of colour, Ms Moyo takes objection to non-African 'do-gooders' epitomized by efforts such as Bono's band-aid. In this guise one cannot but get the feeling that she is being rather unfair to Bono and his collaborators. However, this should not obscure the debate. After all, the debate about 'aid' and its efficacy or otherwise is as old as the hills. Decades ago Teresa Hayter's 'Aid as imperialism' caused very much the same stir and shifted the terrain of debate. Surprisingly, she does not go deep into the 'trade not aid' debate which should have been central to much of the positions she takes.

The work is however necessary. If over a $1 trillion has been sunk into Africa over the last half century without a commensurate positive effect to show for the effort, what the hell is going on ? Ms Moyo is quite emphatic when she says that: "Aid has been, and continues to be, an unmitigated political, economic and humanitarian disaster, " There is no need to pull her punches here, for as she is keen to point out, aid flows to Africa reached a crescendo between 1970 and 1998. In spite of this, amazingly, in the same period, ", poverty in Africa rose from 11% to a staggering 66%". Her effort to shift the territory of debate as a result of this dismal figures is therefore commendable.

In many ways it is unlikely that Ms Moyo's work will have much of an impact in Nigeria. Apart from the philistinism of much of what goes for a political class, Nigeria is not on aid dependent support. It however shares many striking characteristics with those who are - these being, essentially, weak institutional frameworks and a bankrupt political class. The example of oil-rich Nigeria shows quite clearly that even if the aid tap is switched off, without the construction of enduring solid institutions nothing is going to work. Another issue is how to build up a new cadre to run the institutions of the state. The initial post-colonial leadership at least had good intentions. It is true of course that things went wrong somewhere along the line. This has to be put within the context of the cold war and the deformity of the post-colonial formations.

However within the context of the limitations of experience and adverse conditions, at least they were patriotic. This is in striking indeed perturbing contrast to the motley crew of military and military- induced civilians that have since followed. The new parvenu class has been rather disgusting. Hedonism and a crass light headedness have replaced any attempt to actually focus on the issues of development. In Nigeria, for example, a crowd of about 17,000 political office holders take a frightening share of the national cake. This will be absurd if it had been written as a novel; however, what we have is clearly stranger than fiction.

The post-colonial state in Africa needs to be re-configured. In the light of the unravelling of the Anglo-Saxon financial system otherwise referred to as the great economic meltdown there is a clear need for a re-think. All options now have to be considered and this cannot be a time for closed minds. Ms Moyo's analysis is a welcome addition as we expand the territory of debate.

An Option

As we move away from closed minds, every option must be considered. The Central Bank's move to license sharia compliant (risk-sharing) financial institutions is very much welcome. The unravelling of the Anglo-Saxon financial system shows that there is no longer any fixed certainty. Certainly we have hitherto been on a roll. Financial institutions declaring mouth watering profits while the real sector goes down the drain. We've had astonishing dividend payouts while the country is being vigorously de-industrialised.

It's time to consider other options. There can be no better time. The proponents of the old ways, the 'masters of the universe', are no longer feeling as feisty as they once were. Everywhere there is no longer an aversion towards the consideration of different options. Delta state's Governor Uduaghan for example has re-introduced commodity boards. An eminently sensible thing to do. Not so long ago the motion was that commodity boards were as dead as dodo. This of course was the position of the pavlovian dogs of the Bretton Woods institutions in countries like Nigeria. Of course the mother of all commodity boards - the Common Agricultural Policy in the European Union - was unassailable. This is the kind of hypocritical opportunism which occurs when you refuse to use your head.

I didn't have the time to read the whole pablum but I still don't get where she demonstrated that Africa would have been better off today if foreign aid had generally been absent.

Maybe I have to buy her book before she explains the claimed causality, viz, foreign aid begets poverty.

[flash=450,350]
https://www.youtube.com/watch?v=RfobLjsj230[/flash]

Watch this video. In this provocative talk, journalist Andrew Mwenda asks us to reframe the "African question" , to look beyond the media's stories of poverty, civil war and helplessness and see the opportunities for creating wealth and happiness throughout the continent.

4 Play:

I didn't have the time to read the whole pablum but I still don't get where she demonstrated that Africa would have been better off today if foreign aid had generally been absent.

Maybe I have to buy her book before she explains the claimed causality, viz, foreign aid begets poverty.

It's simple Man,
Look around you and sample African Countries that are heavily dependent on Foreign Aid, Are they Better Of?
There is a saying that If The Oracle cannot enrich one then it should leave one to his fate.
What these donors do is to give us aid as disguise and plunder as main motive.

IFELEKE:

It's simple Man,
Look around you and sample African Countries that are heavily dependent on Foreign Aid, Are they Better Of?
There is a saying that If The Oracle cannot enrich one then it should leave one to his fate.
What these donors do is to give us aid as disguise and plunder as main motive.

How did these African countries start depending on foreign aid in the first place? It was because they were so poor that external aid had to be injected to alleviate their poverty. Foreign aid is the consequence of African poverty and not the cause.

4 Play:

How did these African countries start depending on foreign aid in the first place? It was because they were so poor that external aid had to be injected to alleviate their poverty. Foreign aid is the consequence of African poverty and not the cause.

Yes they were poor but what they needed was to be taught how to be self sufficient and not remain financially crippled with aid as the only means of survival(which is what the aid is turning them into).

Read This.
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“The state of Africa is a scar on the conscience of the world.” These were Tony Blair's words not long after his 2001 election victory - a statement that echoes the American character in VS Naipaul's novel A Bend in the River who speaks of Africa “as though Africa was a sick child and he was the parent”. For decades, non-Africans have subjected the world to patronising instruction about the continent. The tendency to outsource political thinking to wealthy pop stars culminated in the Live 8 concerts, when self-congratulatory musicians capered around the stage calling for more aid, the cancellation of debt and saying: “Every time I clap my hands, a child in Africa dies.”

Is lack of charity the problem? Dambisa Moyo points out that, since the second world war, around $1 trillion has been transferred from richer countries to Africa. But it is hard to see what benefit this has brought to a region that remains trapped in failure. Why, Moyo asks, “is it that Africa alone among the continents of the world seems to be locked into a cycle of dysfunction? Why in a recent survey did seven out of the top 10 ‘failed states' hail from that continent?” Moyo, a Zambian economist educated at Oxford and Harvard, who has worked for the World Bank and Goldman Sachs, believes that foreign aid is the root cause of the spiral that has led Africa into its present situation.

Starting with the Marshall Plan and post-war reconstruction, she tracks in some technical detail the West's approach to Africa. The underlying assumption was that foreign aid was the only way to kick-start an underdeveloped region. But as we have seen with the rapid advance of Asia's poorer countries, indigenous economic activity is the only real engine of growth and development. Moyo has plenty of examples of the way in which aid and haphazard loans led to extreme corruption. After President Reagan met Mobutu Sese Seko of Zaire and agreed to his request to reschedule a $5 billion debt in the late 1980s, Mobutu promptly leased Concorde to fly his daughter to her wedding.

Moyo believes that dependency on aid “undermines the ability of Africans, whatever their station, to determine their own best economic and political policies”. She is rightly angry about the way Africa's elected officials and policymakers have often been excluded from the debate, and had little opportunity to argue the merits and demerits of aid, and alternative answers: “This very important responsibility has, for all intents and purposes, and to the bewilderment and chagrin of many an African, been left to musicians who reside outside Africa.” Since the situation remains bleak, western activists tend to press for further aid in an attempt to make things better.


Africa: The State of Africa Martin Meredith; Geldof in Africa by Bob Geldof
This is the Africa you don’t hear about
Dead Aid is a polemic, but Moyo devotes more than half of the book not to outlining what she believes has gone wrong, but presenting possible solutions. She analyses examples where African countries have had economic success. In her view, changes in the world economy since globalisation offer new opportunities for Africa. It is easier than it was for poor countries to access the international capital markets by issuing bonds; emerging market-bond funds have produced strong returns in recent years. Practical measures should be taken to break down trade barriers within Africa. Transferring money, including remittances from family members abroad, needs to be made easier and cheaper. Moyo points out that it costs $1,500 to ship a car from Japan to the Ivory Coast, but another $5,000 to move it to Ethiopia. She offers a variety of solutions - all of them market-based - and notes, for instance, that most of Africa still lacks micro-financing schemes (where small amounts of money are lent to individuals and to communities), which have an excellent track record of actually working.

Externally, there are still numerous obstructions on trade: the OECD should radically slash agricultural subsidies, which have the effect of blocking African farmers from being able to export their goods. Foreign investment is another area that may bring new benefits. In Moyo's opinion, Chinese direct investment and the resultant building of infrastructure such as roads and railways to extract minerals and foodstuffs have had a mainly beneficial effect. China remains popular in much of Africa, and “many Africans scoff at the notion that westerners should be outraged by Chinese implicit support for Africa's corrupt and rogue leaders. It is, after all, under the auspices of Western aid, goodwill and transparency that Africa's most notorious plunderers and despots have risen and thrived”. Moyo suggests that all aid and disguised aid in the form of unrepayable loans should now be phased out, except after natural disasters.

Would the solutions that Moyo proposes be successful? We cannot be sure, but it is clear that the old model of aid and soft loans to Africa has been a tragic, epic failure. There are two areas where I disagree with her analysis. First, she puts insufficient emphasis on the environmental damage that would follow the advance of foreign investors in Africa, and second I believe she is wrong to look at successful Asian economies such as Taiwan and Singapore and deduce that democracy is of secondary importance.

Last month, I travelled from a country without freedom of speech (Egypt) to one where it is in full swing (India), and the immediate change in atmosphere made me feel that an open and democratic system must have a wider, longer-term economic benefit. Even if Moyo's prescriptions - micro-finance, foreign direct investment, more trade, issuing bonds to raise capital - do not work in the way that she hopes, at least they will put Africans in control of their own destiny, and give small-scale business people and entrepreneurs the opportunities that they have had elsewhere. I suggest that Bono buys a copy of Dead Aid and claps Bob Geldof over the head with it, repeatedly.
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http://entertainment.timesonline.co.uk/tol/arts_and_entertainment/books/non-fiction/article5606577.ece

http://cnx.org/content/m13519/latest/

We should issue bonds especially to the chinese and the arabs, they have money.

davidif:

We should issue bonds especially to the chinese and the arabs, they have money.

Maybe to the Arabs, The Chinese I trust will never be a party to that because they know it might put an end to their dumping of sub standard goods in Africa thereby crippling our economies.
Besides,Issuing Of Bonds is Another Thing Entirely.

Besides,Issuing Of Bonds is Another Thing Entirely.

IFELEKE,
Issuing bonds is the solution, that is how you borrow money to run your country. Where do you think the united states gets its money from? by issuing bonds. In fact, the $787 billion stimulus package that obama just passed through congress; the money came from issuing bonds, and everybody wants to buy US Treasury bonds because of there triple A rating, the chinese, saudis, japanese, UAE, brazil all want to buy US bonds so this is the only way to raise money for revenue generating projects like railway, roads, electricity. Then we should use our oil revenue and taxes on things that don't bring in cash flow like education and healthcare. Oil money should not be used for roads, electricity and so on.

Two Ekiti men(IFELEKE, Davidif) fighting about God knows what. How interesting

mr. toyinrayo, i thought you went to UF, but it doesn't look that way. By the way, if you want to understand what bonds mean, then go to google, then you would understand. In layman's terms, its borrowing or taking on debt to pay back with interest.

davidif:

mr. toyinrayo, i thought you went to UF, but it doesn't look that way. By the way, if you want to understand what bonds mean, then go to google, then you would understand. In layman's terms, its borrowing or taking on debt to pay back with interest.

First of all, (f) stands for female. So get that straight.

Second of all, chill, it was a joke.

~rolling my eyesssssss~

davidif:

IFELEKE,
Issuing bonds is the solution, that is how you borrow money to run your country. Where do you think the united states gets its money from? by issuing bonds. In fact, the $787 billion stimulus package that obama just passed through congress; the money came from issuing bonds, and everybody wants to buy US Treasury bonds because of there triple A rating, the chinese, saudis, japanese, UAE, brazil all want to buy US bonds so this is the only way to raise money for revenue generating projects like railway, roads, electricity. Then we should use our oil revenue and taxes on things that don't bring in cash flow like education and healthcare. Oil money should not be used for roads, electricity and so on.

I agree with and am aware of the source for America's Stimulus.
You see, Where I differ is the marketability of these bonds,Do you think these countries we are trying to block from giving us Counter Productive Aid will gladly buy our Bonds or provide enabling environment for it to thrive?
I seriously doubt it.

Second of all, chill, it was a joke.

my bad

You see, Where I differ is the marketability of these bonds,Do you think these countries we are trying to block from giving us Counter Productive Aid will gladly buy our Bonds or provide enabling environment for it to thrive?
I seriously doubt it.

IFELEKE,
This is where i differ with you. Investors all over the world are looking for a way to make profit and they are always look at high yield bonds they might want to invest in, so if the Nigerian govt. decides to register bonds on the asian market or in the UK or US (you have to pay a fee for that of course), don't you think private investors around the world would take a closer look at it. It doesn't have to be George Soros or Warren Buffet, it could be a private equity fund or retirement fund, or some south african enterprenuer. It doesn't have to be a sovereign wealth fund who comes to your rescue and buys your bonds it could be private investors who are always looking for a way to make money and it wouldn't hurt if they took a second look at it. Even me myself, i would buy bonds if  i had enough cash  and if my country or my state was issuing bonds to build a new road because i know that the state can generate revenues from the road through toll booths (imagine a thousand cars paying toll fees a week). This is how things work in the US, local govt or state govts don't wait for the fed govt to allocate money each year to them, they raise money by taxes and borrowing (issuing debt instruments like bonds) which they pay back with interest. It could be a 3 year or even 100 year bonds but at least you would be getting your interest payments because unlike stocks, bonds are fixed income assets. Plus, the good thing about a bond is that if you are scared of the issuer defaulting on there payments to you, you can buy an insurance on the bond otherwise known as a credit default swap.

I have never understood where Africans got the notion that the developed countries would provide the solutions to our problems, given that, more  often than not, they are the root cause of the problem.

The actions of the developed countries have always been motivated by a single factor: their own interests. The effects of such actions on the African populace (be it positive, negative or neutral) are consequences and not objectives. Until we learn to think for ourselves, and come up with our own solutions to our problems, we will be stuck in the quagmire of poverty.

Foreign aids were never given to help Africans in the true sense, but rather it was more like livestock feed given to a reared animal, which is fed so as to deliver the desired products for the farmer

So Africa's route to prosperity is through leveraging on debt? Charlatanism on steroids!

4play


this is the the route other countries have used to prosperity!! Japan, singapore, south korea, USA, England. Every country.

This strategy worked extremely well for the united states, that's why they are the most powerful nation in the world. After the revolutionary war in the 1700's, america had a huge deficit, there only way of raising money was to issue bonds to the public which they bought in support of there country. They didn't wait for the UN or the IMF or World Bank to give them donations like our pathetic continent.

You people should start realizing that there is nothing like free lunch in this world. You shouldn't be begging people for free money.

Foreign aids, issuing bonds, paris club loans etc will never solve africa's problems. Input of capital into africa is like fetching water into a leaking tank, you will end up with less than you put in, and given enough time, will drain to nothing.

$600 billion has already been transferred to Africa since the 1960s; the only effective solution is a capital market that allows trade and business to be established. The West has only made things worse by intentionally/unintentionally supporting corrupt and tyrannical rulers,Many African leaders don't want to leave power, and the longer they stay in power the more corrupt they become. African leaders should stop thinking that there are the only ones who can rule. As long as the G-8 does not stop giving money to these thugs, Africa will never become economically independent because no one would invest in a country that is not politically stable. The road to freedom and prosperity for this continent so rich in natural resources is through the institution of property rights and the rule of law, and ultimately the institution of governing structures that are transparent and democratic. But most important for the West is the lowering of trade barriers.

So long as we remain mentally dependent on other races to do our thinking and plan our progress, that is how long we will remain in the ghettoes and slums and the poverty and diseases that they produce, and mental dependence presupposes physical dependence. If we need something we must work in unity and get it or create it ourselves

Thank you Horus, I agree with you. The aid is an impediment to our ambition for self realization and blocks our resourcefullness for competition.